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Journalism about foundations, nonprofits and their impact

The notion that small is beautiful crosses ideological lines. E.F. Schumacher’s 1973 classic, Small is Beautiful: A Study of Economics As If People Mattered, which was shaped by Buddhist thought and the environmental movement, helped brings us farmer’s markets, tiny houses and anti-globalization activism. Tea Party Republicans (and some progressives) embrace federalism, arguing that power should shift away from Washington towards state and local governments that are more effective, efficient and accountable. A key principle of Catholic social thought is subsidiarity, which holds that nothing should be done by a large, complex organization that can be done as well by a smaller, simpler one. Anyone who have been frustrated by bureaucracy gets the idea.

As senior executives at the World Bank during the 1990s, Mari Kuraishi and Dennis Whittle lived every day with the challenge of bigness. Risk-taking was discouraged, not merely because governments are risk-averse, but because the stakes were high. As Kuraishi explains: “The whole industry of development — the World Bank, US AID, even big private foundations –structurally discourage innovation. They need to push large amounts of money out, so you don’t do $10,000 experiments. They’re making $30 million loans. When you’re spending $30 million it’s irresponsible to fail.”

In 2000, Mari and Dennis, who are married (and who I’ve known for years), founded GlobalGiving, a online crowdfunding platform for grassroots charitable projects. GlobalGiving enables donors, most in the west, to fund local organizations with creative ideas that might not be funded by traditional philanthropy. The ability to solve community problems often lies in those communities, Mari and Dennis believe.

“We’ve constantly underestimated the power of people and organizations to do more for their communities,” Mari told me.. “Great ideas can come from anyone at any time at any place.”

They struggled at first; this was before startups like Kiva, Kickstarter and indiegogo popularized crowdfunding. “Days would go by when nothing would happen,” Mari says. But they eventually began to connect donors and nonprofits, most quite small, around the world. Over time, GlobalGiving got support from big foundations including the Hewlett and Packard foundations, and help from corporate partners including Microsoft, Dell, Gap, Pepsi and Nike, who used the platform to encourage their workers to give. Since 2002, GlobalGiving has raised $183,916,979 from 470,367 donors who have supported 12,474 projects–an impressive track record.

That said, there’s a problem with supporting hundreds of small organizations in remote parts of the world. Currently, GlobalGiving has about 2,800 projects on its site–an effort to rescue primates from wildlife trafficking in Cambodia, an orphanage in Haiti, a shelter for earthquake survivors in Nepal, a rural education program in India. Faced with a bewildering array of options, how can donors know which is most effective? Mari and Dennis are acutely aware of this issue, and so they are working to make GlobalGiving not just a financial intermediary, but a platform to helps organizations learn and improve.

Mari says: “We want to flow more dollars to more effective organizations and create the incentive for organizations to do better.”

That’s hard. But it’s a goal that every major donor should embrace.

The question is, how? GlobalGiving begins with basic vetting. To get onto the platform, nonprofits must raise at least $5,000 from a minimum of 40 different donors, and submit various documents. They’re periodically audited, and GlobalGiving does on-site spot checks of about 800 groups a year. Those processes set a floor for honest behavior.

Beyond that, GlobalGiving has experimented with a variety of efforts–some simple, others more complex–to drive higher performance at the organizations they fund. At the simplest level, they publish a Tools and Training blog and put together a online course for nonprofits called the Social Training Academy; through blogposts and webcasts, the course helps groups set goals, develop programs, measure success and, importantly, listen and respond to community feedback. (Dennis, who stepped down as CEO of GlobalGiving but remains on its board, now leads Feedback Labs, a two-year-old nonprofit aimed at making citizen feedback loops the new norm in aid, development, and philanthropy.) Interestingly, to make it more likely that nonprofits take the course seriously, GlobalGiving requires that they put up a $50 deposit to join, repayable if they participate in the requisite number of sessions and assignments.

About five years ago, with initial funding from the Rockefeller Foundation, GlobalGiving launched a storytelling project in east Africa during which teams of Kenyans and Ugandans were sent into communities to ask a simple, open-ended question: “Tell us about a time when a person or an organization tried to change something in your community.” They collected more than 57,000 stories. Making sense of the stories has been a challenge, but particular anecdotes proved useful. One set of stories turned up dissatisfaction with a youth sports group in Kenya, so funding was redirected to a competing group; another nonprofit learned that the girls it was helping wanted help dealing with reproductive rights, sexual assault and AIDs.

Last year, GlobalGiving held a contest called Fail Forward, offering cash prizes to nonprofits that told a story of a failure and what the group learned from it. The goal is to drive transparency and knowledge-sharing in the sector.

A mantra of GlobalGiving is listen, learn, act, repeat, so it is trying to measure the commitment of its nonprofits to learn and their willingness to use tools to improve their effectiveness. GlobalGiving has begun to rank its nonprofits as Partner, Leader or Superstar and, while the rankings aren’t publicized on the website, the groups know where they stand and top performers are rewarded with favored placement on the platform.

“We can say: When you do the right things, we channel more money to you,” Mari told me. “To be on the top page means a lot more than being on page 11.”

To the best of its ability, GlobalGiving is trying to create a market for its partners, one that favors those who do good better and, inevitably, disadvantages those that are less effective. This is a big idea (see my March blogpost, Learning from Uber and AirBnB) and an important one. It’s being pushed by the Fund for Shared Insight, by Dennis’s Feedback Labs and by some influential leaders in philanthropy. Making it the norm in the nonprofit sector will require big money and big effort.